Prabhudas Lilladher's research report on Aarti Industries
Q1FY23 Revenue/ EBITDA/ PAT growth of 50%/18%/15% YoY led by higher realizations (cost pass through) and volumes (+15-20% YoY). Ramp-up of recently commissioned plants, Jhagadia chlorination capacity and Dahej phase 2 unit to drive specialty chemicals revenue while pharma revenue to be driven by higher volumes from regulated markets, value-added products and new intermediate products. Upcoming projects to aid penetration in key therapies (anti-hypertension, cardio-vascular, oncology, corticosteroids). We expect healthy revenue/ EBITDA/ PAT CAGR of 18%/21%/24% (adj for termination fees) over FY22-24E, on rising capacity utilization (high capex intensity of Rs 45-50 bn over FY22-24E focused on value added derivatives) import substitution, rising domestic demand and China +1 strategy.
Maintain ‘Accumulate’ rating with TP of Rs 880 (19x FY24E EV/EBITDA).
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